Correlation Between Ford and Alternative Income
Can any of the company-specific risk be diversified away by investing in both Ford and Alternative Income at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Ford and Alternative Income into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Alternative Income REIT, you can compare the effects of market volatilities on Ford and Alternative Income and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Ford with a short position of Alternative Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Alternative Income.
Diversification Opportunities for Ford and Alternative Income
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Ford and Alternative is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Alternative Income REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alternative Income REIT and Ford is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Ford Motor are associated (or correlated) with Alternative Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alternative Income REIT has no effect on the direction of Ford i.e., Ford and Alternative Income go up and down completely randomly.
Pair Corralation between Ford and Alternative Income
Taking into account the 90-day investment horizon Ford Motor is expected to under-perform the Alternative Income. In addition to that, Ford is 1.8 times more volatile than Alternative Income REIT. It trades about 0.0 of its total potential returns per unit of risk. Alternative Income REIT is currently generating about 0.04 per unit of volatility. If you would invest 6,404 in Alternative Income REIT on September 3, 2024 and sell it today you would earn a total of 356.00 from holding Alternative Income REIT or generate 5.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 97.66% |
| Values | Daily Returns |
Ford Motor vs. Alternative Income REIT
Performance |
| Timeline |
| Ford Motor |
| Alternative Income REIT |
Ford and Alternative Income Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Alternative Income
The main advantage of trading using opposite Ford and Alternative Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Alternative Income can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Alternative Income will offset losses from the drop in Alternative Income's long position.| Ford vs. GreenPower Motor | Ford vs. ZEEKR Intelligent Technology | Ford vs. Volcon Inc | Ford vs. Ford Motor |
| Alternative Income vs. Europa Metals | Alternative Income vs. AMG Advanced Metallurgical | Alternative Income vs. GreenX Metals | Alternative Income vs. Empire Metals Limited |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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